Talks of a moratorium for condo conversions in cities like Westwood, Brentwood and the San Fernando Valley were also of concern to many panelists. CB Richard Ellis’ Laurie Lustig-Bower, one of Wallace’s fellow panelists, stated that “this [moratorium] is pretty serious…it will be pretty hard to get deals done today because we don’t know if the rules are going to change and we may not know for another six months. Until then, deals will stagnate.” Not that most investors want to continue throwing money at condo conversions anyway. “The condo price appreciation has slowed in all major southwestern cities,” said Delores Conway, director of the Casden Real Estate Economics Forecast at USC’s Lusk Center and a panelist in the economy panel. “The apartment market has really picked up, with vacancies declining and rates [rising]…there’s also a slowdown in housing purchases and many San Diego condos are reverting back to apartments.” With home prices at all-time highs, but sales slowing, many panelists said that future rents will continue growing--despite the shrinking home market putting pressure on the apartment industry to keep vacancy rates low. Members of the broker panel said that Southern California would experience a three-year average rent growth of between 5% to 7% annually.
October 6, 2006